I only make big calls when three things line up perfectly to create what I call an “inflection point”: the fundamentals, my “scuttlebutt” research, and my read of investor sentiment. In the case of Tesla, the fundamentals are terrible, the research provided on Twitter and elsewhere by a small army of amateur analysts reveals that demand is weak and inventories are piling up, and I sense that the number of investors who are losing confidence in Musk is finally exceeding those who are drinking his Kool Aid. Tesla shares were trading at $295 at the time. Six and half weeks later, they closed at $234.54 today, already down more than 20%... And I think they have much further to fall. The number of investors who are losing confidence in Musk is finally exceeding those who are drinking his Kool Aid. To be clear, I am not hoping that Tesla fails. Rather, I am predicting that its shares will collapse. Musk is an incredible entrepreneur and visionary who has created two companies that are changing the world. Tesla makes great cars. I enjoy driving them, and every one of my friends who owns one loves it. More important, Tesla has almost single-handedly forced every major auto manufacturer in the world to invest billions of dollars into
After I covered, I warned all of my friends not to short the stock. It was an open-ended situation, with a visionary, entrepreneurial founder and CEO, Elon Musk. Musk was leading a team of brilliant engineers, developing groundbreaking products in two of the world’s largest markets – autos and energy. Plus, the stock had a cult-like following of investors who didn’t care if Musk behaved erratically and consistently overpromised. These are the ingredients of a dangerous short. For five years, I stood on the sidelines, closely following the epic battle between Tesla bulls and bears. Then I saw what I believed was the “inflection point” for the stock. In March, I made one of my rare big calls, writing... I’ve been following [Tesla] closely for years and, after carefully reviewing everything over the weekend (including the transcript of Musk’s [regulation-violating] call last week), today I’m making one of my rare big calls: we will look back on last Friday as the beginning of the end for Tesla’s stock . I think Musk has no more rabbits to pull out of his hat, and therefore, it’s all downhill from here. I predict that by the end of the year, the stock, today at $295, will be under $100. I don’t make calls like this very often. The last two were bitcoin the hour it peaked at $20,000 on December 16, 2017... and Tilray (TLRY) the hour it peaked at $300 last September 19...
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May 2019
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